Edit Metric
|
||||||||||||||||||||
Details
|
||||||||||||||
Energy Conversion Devices (ENER)Stock (Solar Power Industry, Semiconductor - Specialized Industry, Solar Cell Manufacturers Industry, Energy Industry)
 The company's solar power business uses amorphous silicon to make thin-film solar panels. The solar industry has suffered from a cost per watt that is significantly higher than coal and Nuclear Energy, a problem aggravated by a price spike in silicon wafers that started in 2006. Though thin-film technology is supposed to cut production costs by using less silicon, Uni-Solar's cost per watt is on par (or higher) than many of the industry's current players, while its energy efficiency is much poorer than even other thin-film producers like First Solar. Legislative support for renewable energy, stemming from concerns about climate change and rising oil prices, however, is subsidizing the cost of solar energy. Furthermore, Uni-Solar is planning to cut its costs down to some of the industry's lowest levels by the time the shortage is predicted to end. Ovonyx's phase-change memory technology has been the talk of the IT community. It's been touted as up to thirty times faster than the current memory standard, and has the added bonus of being able to store active data without energy - turn your computer off and on and everything will be exactly as you left it, without having to be written to a hard drive. The company's technology has already been licensed by a number of IT giants, like Intel and Samsung. Its long term prospects are threatened, however, by the possibility of a tellurium shortage; as one of the rarest substances on Earth, the supply of tellurium will be greatly constrained by high demand for phase-change memory. Energy Conversion Devices competes with computer hardware companies like SanDisk, as well as with solar power companies like First Solar and Suntech Power Holdings.
[edit] Business and FinancialsEnergy Conversion Devices operates a number of subsidiary alternative energy and information technology businesses, though it's main business is United Solar Ovonic. United Solar Ovonic (Uni-Solar) is a wholly-owned subsidiary of ENER. It is a designer/manufacturer of thin-film amorphous silicon photovoltaic cells, used to convert sunlight to electricity. All of United Solar's products use their triple-junction amorphous silicon (a-Si) photovoltaic technology. United Solar sells both framed and flexible photovoltaic modules. Modules are combined into larger arrays and used for residential and commercial applications. As of Q1 2008, 96% of their modules sold were used for roof-top power generation. ENER claims that their a-Si photovoltaics perform better than other solar cells (crystalline and other thin-film) under real world conditions. They attribute this to more sensitivity under low and diffuse light conditions, better performance at high temperatures, and higher tolerance to shading. Photovoltaic Manufacturing Capacity with Outlook
source: FY 2007 Annual Meeting Another major ENER business is Ovonyx, of which the company owns 31% on a fully diluted basis. Ovonyx commercializes and licenses its proprietary phase-change silicon memory technology to be used in non-volatile IT memory applications. Phase-change technology could eventually replace modern NOR flash, DRAM, EEPROM, and NAND memory. Ovonyx already has licensing agreements with Intel, Samsung, STMicroelectronics N.V., Hynix, and Qimonda. ENER owns a number of other companies, operating in fields ranging from fuel cells to hydrogen storage to high-efficiency batteries. ENER's battery business is operated through its 50% ownership of Cobasys. Cobasys is a joint venture between Chevron and Energy Conversion Devices. Cobasys is a designer and manufacturer of Nickel-Metal Hydride batteries to be used in transportation and stationary applications.
United Solar contributes the overwhelming majority of revenue for ENER. For Q1 2008, Uni-Solar provided 89% of the company's revenue. As of Q1 2008, gross margins for photovoltaics were roughly 15%. The company expects this to increase to 21-23% by Q4 2008, with a long term target of 25%. The company expects to be able to sustain profits by Q4 2008. Because of its contribution to ENER's revenue and the recently explosive growth in the solar market, United Solar is expected to be the main driver behind ENER's future growth. The company expects increased manufacturing capacity and improved margins to underpin the future prosperity of United Solar. Margins are expected to improve through lower costs and improved photovoltaic efficiency. [edit] Trends and Forces[edit] Despite the Low-Cost Possibilities of Thin-Film, Uni-Solar's Cost-per-Watt is Relatively HighUni-Solar's amorphous silicon technology costs about $2.49 per watt to manufacture and has an efficiency of about 8.5%[2]. First Solar, Uni-Solar's main thin-film competitor, has a cost-per-watt of $1.12[3] and an efficiency of about 10.5%[4]. Thin-film solar cells are touted to be much more cost-efficient than traditional crystalline cells because they use far less silicon, while their design allows them to generate near full capacity even on cloudy days - though "full capacity" efficiency for thin-film cells is less than half as high as crystalline cells. The cost of Uni-Solar's thin film cells, however, is on par with those crystalline producers, making it far less efficient, per watt, than most other solar panels, including that of its main competitor. This discrepancy can be resolved by examining each of the company's materials. Uni-Solar uses silicon in its solar cells, while First Solar uses Cadmium telluride. Currently, with the advent of solar power and its rapid growth, demand for silicon has increased greatly, leading to its under-supply as production capacity is not enough to meet current demand. This under-supply has led to rising prices for solar equipment which in turn raises the price of solar power compared to other clean energy production technologies such as wind and ethanol. Furthermore, higher silicon prices mean higher production costs for silicon- based solar companies - and lower margins. Uni-Solar's use of silicon is what has driven its cost up to a level similar to that of crystalline silicon competitors like SunPower and Suntech. The company expects to achieve costs of $1.10 per watt by 2012, because the silicon shortage should end by then. Furthermore, many analysts have predicted an increase in demand for tellurium, a key ingredient in First Solar's panels, and one of the rarest substances on Earth. If tellurium demand rises (and the potential of ENER's phase-change memory product, which contains tellurium, will be a factor), First Solar's costs will go through the roof and Uni-Solar will become one of the leading thin-film producers. [edit] Legislative Support for Solar is Driving its Growth in Key MarketsGovernments worldwide have implemented legislation to encourage alternative energy production, due to political pressure from public concerns about climate change and energy independence. Examples include:
Emissions caps and clean energy mandates that are supported by subsidies and tax cuts make solar energy relatively cheaper. This means that corporations and utilities companies may turn to clean energy sources to generate electricity for manufacturing facilities and power plants, directly benefiting solar power companies like Uni-Solar. Without government support, however, solar companies would have difficulty vending their products, as solar energy is currently much less cost effective than coal or natural gas; while the average natural gas plant costs $1,200 - $1,600 per kilowatt installed[6], Uni-Solar's panels, when fully installed, cost around $6 per watt, or $6,000 per kilowatt installed[7], aggravating the need for legislative support. [edit] Phase-Change is the Next Big Advance in Computer Memory - and ENER's Ovonyx is at the Head of the IndustryOvonyx, ENER's semiconductor wing, has designed a commercially viable way to produce phase-change computer memory, a method of information storage that is even better (read: faster with higher total capacity) than the previous hot memory technology, flash. Phase change uses some complex physics to store data by turning the surface of a semiconductor from crystalline to random. In 2005, consumers spent $12 billion on flash memory products (drives, cards, etc.)[8], so the potential for phase change (an even better technology) is tremendous, especially given the growth file sizes associated with increasing network speeds and the advent of digital natives who will be demanding more interactive computer technologies. Ovonyx has already leased its technology to a number of international information technology majors: Intel (a partial owner of Ovonyx), Samsung, Elpida, Hynix, Qimonda, and ST Microelectronics. Currently, these companies are developing small memory parts for 2008 release, but the potential for phase-change is enormous: it can be up to 30 times faster than flash memory and, if incorporated into personal computers' internal boards and drives, can enable a user to turn the computer off and on - for any period of time - and start right where he left off without needing to re-boot.[9] [edit] Tellurium is the Catch for Ovonyx's Phase Change TechnologyDespite the tremendous potential of ENER's phase change product, there is a major risk involved. Ovonyx's technology uses a substance called chalcogenide, developed by Energy Conversion Devices co-founder Stanford Ovshinsky. This substance, while allowing the complex phase changes necessary for memory storage, is made with tellurium; one of the rarest substances on Earth, tellurium is a minor industrial byproduct in the production of copper. Since 2004, the price of tellurium has fluctuated substantially, between a low of $10/lb and a high of $155. Demand for tellurium has been driven in recent years by the growth of Uni-Solar's competitor, First Solar, who uses the substance in its thin-film panels, consuming 8 tons in 2006 and more in 2007. Furthermore, common consumer goods like CD-RWs, DVD-RWs, and the newly developed Blu-Ray-RW use tellurium. The problem is, it's only possible to get about 400 tons of tellurium annually - and if phase change memory catches on while blu-ray and CdTe solar cells continue to grow, there just isn't going to be enough of it to go around. Rapidly rising future tellurium prices could make phase change just too expensive for normal consumers - a major part of flash memory's sales in past years. [edit] CompetitionOn the phase-change memory front, Energy Conversion Devices has few competitors, since it invented the technology and is now leasing it out to other IT companies. Its technology, however, will compete with the current standard, flash memory. Companies that produce flash media include SanDisk, Silicon Motion Technology, and Lexar Media. Energy Conversion Devices is a growing member of the solar market, though it isn't yet a major player. It's hoping that its costs will fall enough that, once the silicon shortage has been solved, it will out-compete other manufacturers on a cost-per-watt basis. Some of its major solar competitors, with 2005 market share[10], include:
 Energy Conversion Devices2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References/Links
|
The Shelf
|
Edit
History
Bookmark
